Trilogy Metals Reports First Quarter Fiscal 2018 Financial Results
1
Trust | Respect | Integrity
News Release
Trilogy Metals Reports First Quarter Fiscal 2018 Financial Results
April 5, 2018 - Vancouver, British Columbia – Trilogy Metals Inc. (TSX / NYSE
American: TMQ) (“Trilogy”, "Trilogy Metals” or "the Company”) is pleased to report its first
quarter results for the period ended February 28, 2018. Details of the Company's financial
results are contained in the unaudited interim consolidated financial statements and
Management's Discussion and Analysis which will be available on the Company's website at
www.trilogymetals.com, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. All
amounts are in United States dollars unless otherwise stated.
First Quarter 2018 Highlights:
Strong working capital position of $12.6 million, with cash on hand of $12.1 million.
Announced final drill results for the 2017 Bornite Project drill program and the results
of a metallurgical test work program demonstrating that a high quality, 30% copper
concentrate containing no deleterious metals can be produced from the currently
defined in-pit resources at the Bornite Project.
Announced $10 million program and budget for the Bornite Project in 2018 which has
been fully funded by South32 Limited (“South32”).
Announced additional in-fill drill results for the 2017 Arctic Project drill program and
the results of the Arctic Project Pre-Feasibility Study (“Arctic PFS”) showing strong
economics.
Announced a wholly-owned subsidiary of South32 had become a new large shareholder
of the Company and concurrently, Trilogy had given South32 participation rights in
future financings to participate to a minimum of 20% to a maximum of 40% in future
financings, private or public, to a maximum ownership of 19.9% in the Company. The
right expires if South32 does not participate for the lesser of 20%, or that number of
shares that would not put them past a 19.9% ownership interest in the Company, in
any particular financing.
Arctic Project
In a press release dated February 20, 2018 we announced the results of the Arctic PFS for
our Arctic Copper-Zinc-Lead-Silver-Gold Project located in the Ambler mining district of
Northwestern Alaska. These results converted indicated mineral resources at the Arctic Project
to probable mineral reserves.
TSX / NYSE American
Symbol: TMQ
2
Trust | Respect | Integrity
Highlights of the Arctic PFS are as follows:
Pre-tax Net Present Value (“NPV”)8% of $1,935.2 million calculated at the beginning of
the three-year construction period and an Internal Rate of Return (“IRR”) of 38.0%
for the base case.
After-tax NPV8% of $1,412.7 million and after-tax IRR of 33.4% for the base case.
Initial capital expenditure of $779.6 million and sustaining capital of $65.9 million for
total estimated capital expenditures of $845.5 million over the estimated 12-year mine
life. In addition, closure and reclamation costs are estimated at $65.3 million.
Estimated pre-tax and after-tax payback of initial capital within 2 years for the base
case at $3.00/lb copper. At $2.00/lb copper, pre-tax and after-tax payback of initial
capital is 3 years.
Minimum 12-year mine life supporting a maximum 10,000 tonne-per-day conventional
grinding mill-and-flotation circuit to produce copper, zinc and lead concentrates
containing significant gold and silver by-products.
Life of mine strip ratio of 6.9 to 1.
Average annual payable production projected to be more than 159 million pounds of
copper, 199 million pounds of zinc, 33 million pounds of lead, 30,600 ounces of gold
and 3.3 million ounces of silver for life of mine.
A capital intensity ratio on initial capital of approximately $6,200 per tonne of average
annual copper equivalent produced.
Estimated cash costs of $0.15/lb of payable copper (C1 cash costs include on-site
mining and processing costs, road tolls and maintenance, transport, royalties, and is
net of by-product credits).
Total “all-in” cash costs (initial/sustaining capital, operating, transportation, treatment
and refining charges, road toll, and by-product metal credits) estimated at $0.63/lb of
payable copper.
Management believes economic indicators justify moving forward with permitting and
a feasibility study.
Bornite Project
In a press release dated December 4, 2017, the Company announced the final set of drill
results at the Bornite Project from the 2017 exploration drill program and in a press release
dated January 10, 2018 the Company announced the results of a metallurgical test work
program demonstrating that a high quality, 30% copper concentrate containing no deleterious
metals can be produced at the currently defined in-pit resource at the Bornite Project.
In a press release December 14, 2017, the Company announced that South32 Limited had
committed to fund the second tranche of $10 million under an Option Agreement on the
Company’s Alaskan assets entered into on April 10, 2017 (“Option Agreement”). The funds
were fully received during the quarter and maintain the Option Agreement in good standing.
3
Trust | Respect | Integrity
Selected Results
The following selected financial information is prepared in accordance with U.S. GAAP.
in thousands of dollars,
except for per share amounts
Three months ended
Selected expenses February 28,
2018
$
February 28,
2017
$
General and administrative 345 370
Mineral properties expense 1,131 639
Professional fees 159 125
Salaries 229 239
Salaries – stock-based compensation 922 395
Unrealized (gain)/loss on held for trading
investments
(639) 1,239
Loss/(gain) on sale of investments 774 (3)
Loss and comprehensive loss for the period 2,946 2,996
Basic and diluted loss per common share $0.03 $0.03
For the three months ended February 28, 2018, Trilogy reported a net loss of $2.9 million (or
$0.03 basic and diluted loss per common share) which was comparable to a net loss of $3.0
million for the corresponding period in 2017 (or $0.03 basic and diluted loss per common
share). However, there were notable variances in the following expenses.
Both realized and unrealized loss (gain) on held for trading investments had significant
movements period-to-period. The investments consist of common shares and warrants in
GoldMining Inc. (“GMI”) acquired as consideration for the sale of Sunward Investments
Limited (“Sunward”) and its Titiribi gold-copper exploration project in Colombia. During the
period ended February 28, 2018, the Company sold 1,360,000 (2017 – 410,000) common
shares of GMI for proceeds of $1.4 million (2017 – $0.6 million) and realized a loss on sale of
$0.8 million (2017 - $Nil). During the period, the Company recorded an unrealized gain on
the common shares of GMI of $0.6 million (2017 - loss of $1.2 million).
Adjusting for the realized and unrealized loss (gain) on held for trading investments, total
expenses increased to $2.8 million for Q1 2018 compared to $1.8 million in Q1 2017. The
increase is due to an increase in mineral properties expenses and stock-based compensation.
We incurred $1.1 million in mineral properties expense in Q1 2018 compared to $0.6 million
in Q1 2017. The increase in mineral property expenses in 2018 was a result of the
engineering, environmental and other consulting costs incurred in preparation of the Arctic
PFS.
The increase in stock-based compensation is due to a higher share price contributing to an
overall greater fair value for option grants and an increase in units granted in the period
compared to the prior period.
Outlook
The 2018 program and budget at the Bornite Project of $10 million was approved by a
Technical Committee jointly represented by Trilogy and South32 and will include in-fill and
off-set drilling to better define and expand the high grade copper resources at the Bornite
Project. We are currently planning for the field season which we anticipate to start in May
4
Trust | Respect | Integrity
2018.
For the Arctic Project, we will continue the ore sorting program that has been initiated in
FY2017. With the release of the Arctic PFS results during the quarter and the filing of the
National Instrument 43-101 Technical Report subsequent to quarter end, the Company will
start looking into next steps for the Arctic Project which will be getting prepared for feasibility
and permitting.
We will be continuing to work closely with The Alaska Industrial Development and Export
Authority (“AIDEA”) (the proponent for the Ambler Mining District Industrial Access Project
(“AMDIAP”)) to advance the permitting process on the AMDIAP throughout 2018. The Bureau
of Land Management (“BLM”), as the lead federal agency for the Environmental Impact
Statement (“EIS”), will be moving the project through the EIS process. BLM has reached the
end of the scoping process and according to the notice of intent, will be delivering a draft EIS
by March 29, 2019 with the final EIS due December 30, 2019. A record of decision is due
within one month of the final EIS. BLM will be developing preliminary alternatives based on
the project purpose and need over the next few months, taking into account the input received
from the public and agency comments during the scoping phase that was recently completed
on January 31, 2018.
Qualified Persons
Andrew W. West, Certified Professional Geologist, Exploration Manager for Trilogy Metals Inc.,
is a Qualified Person as defined by National Instrument 43-101. Mr. West has reviewed the
technical information in this news release and approves the disclosure contained herein.
About Trilogy Metals
Trilogy Metals Inc. is a metals exploration company focused on exploring and developing the
Ambler mining district located in northwestern Alaska. It is one of the richest and most-
prospective known copper-dominant districts located in one of the safest geopolitical
jurisdictions in the world. It hosts world-class polymetallic VMS deposits that contain copper,
zinc, lead, gold and silver, and carbonate replacement deposits which have been found to
host high grade copper mineralization. Exploration efforts have been focused on two deposits
in the Ambler mining district - the Arctic VMS deposit and the Bornite carbonate replacement
deposit. Both deposits are located within the Company's land package that spans
approximately 143,000 hectares. The Company has an agreement with NANA Regional
Corporation, Inc., a Regional Alaska Native Corporation that provides a framework for the
exploration and potential development of the Ambler mining district in cooperation with local
communities. Our vision is to develop the Ambler mining district into a premier North
American copper producer.
Company Contacts
Rick Van Nieuwenhuyse Elaine Sanders
President & Chief Executive Officer Vice President & Chief Financial Officer
604-638-8088 or 1-855-638-8088
# # #
5
Trust | Respect | Integrity
Cautionary Note Regarding Forward-Looking Statements
This press release includes certain "forward-looking information” and "forward-looking statements”
(collectively "forward-looking statements”) within the meaning of applicable Canadian and United States
securities legislation including the United States Private Securities Litigation Reform Act of 1995. All
statements, other than statements of historical fact, included herein, including, without limitation, the
future price of copper, the estimation of mineral reserves and mineral resources, the realization of
mineral reserve and mineral resource estimates, the timing and amount of estimated future production,
costs of production, capital expenditures, costs and timing of the development of projects, the likelihood
and timing of the AMDIAP, the potential future development of the Bornite and Arctic Projects (the
“UKMP Projects”), the future operating or financial performance of the Company, planned expenditures
and the anticipated activity at the UKMP Projects, are forward-looking statements. Forward-looking
statements are frequently, but not always, identified by words such as "expects”, "anticipates”,
"believes”, "intends”, "estimates”, "potential”, "possible”, and similar expressions, or statements that
events, conditions, or results "will”, "may”, "could”, or "should” occur or be achieved. These forward-
looking statements may include statements regarding perceived merit of properties; exploration plans
and budgets; mineral reserves and resource estimates; work programs; capital expenditures; timelines;
strategic plans; market prices for precious and base metals; or other statements that are not statements
of fact. Forward-looking statements involve various risks and uncertainties. There can be no assurance
that such statements will prove to be accurate, and actual results and future events could differ
materially from those anticipated in such statements. Important factors that could cause actual results
to differ materially from the Company's expectations include the uncertainties involving success of
exploration, development and mining activities, permitting timelines, requirements for additional capital,
government regulation of mining operations, environmental risks, unanticipated reclamation expenses;
mineral reserve and resource estimates and the assumptions upon which they are based; assumptions
and discount rates being appropriately applied to the PFS; our assumptions with respect to the likelihood
and timing of the AMDIAP; capital estimates; prices for energy inputs, labour, materials, supplies and
services the interpretation of drill results, the need for additional financing to explore and develop
properties and availability of financing in the debt and capital markets; uncertainties involved in the
interpretation of drilling results and geological tests and the estimation of reserves and resources; the
need for cooperation of government agencies and native groups in the development and operation of
properties as well as the construction of the access road; the need to obtain permits and governmental
approvals; risks of construction and mining projects such as accidents, equipment breakdowns, bad
weather, non-compliance with environmental and permit requirements, unanticipated variation in
geological structures, metal grades or recovery rates; unexpected cost increases, which could include
significant increases in estimated capital and operating costs; fluctuations in metal prices and currency
exchange rates; and other risks and uncertainties disclosed in the Company’s Annual Report on Form
10-K for the year ended November 30, 2017 filed with Canadian securities regulatory authorities and
with the United States Securities and Exchange Commission (the “SEC”) and in other Company reports
and documents filed with applicable securities regulatory authorities from time to time. The Company's
forward-looking statements reflect the beliefs, opinions and projections on the date the statements are
made. The Company assumes no obligation to update the forward-looking statements or beliefs,
opinions, projections, or other factors, should they change, except as required by law.
Non-GAAP Performance Measures
Some of the financial measures referenced in this press release are non-GAAP performance measures.
We have not reconciled forward-looking full year non-GAAP performance measures contained in this
news release to their most directly comparable GAAP measures, as permitted by Item 10(e)(1)(i)(B) of
Regulation S-K. Such reconciliations would require unreasonable efforts at this time to estimate and
quantify with a reasonable degree of certainty various necessary GAAP components, including for
example those related to future production costs, realized sales prices and the timing of such sales,
timing and amounts of capital expenditures, metal recoveries, and corporate general and administrative
amounts and timing, or others that may arise during the year. These components and other factors
could materially impact the amount of the future directly comparable GAAP measures, which may differ
significantly from their non-GAAP counterparts.
6
Trust | Respect | Integrity
Cautionary Note to United States Investors
This press release has been prepared in accordance with the requirements of the securities laws in effect
in Canada, which differ from the requirements of U.S. securities laws. Unless otherwise indicated, all
resource and reserve estimates included in this press release have been prepared in accordance with
Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and
the Canadian Institute of Mining, Metallurgy and Petroleum (CIM)—CIM Definition Standards on Mineral
Resources and Mineral Reserves, adopted by the CIM Council, as amended (“CIM Definition Standards”).
NI 43-101 is a rule developed by the Canadian Securities Administrators which establishes standards
for all public disclosure an issuer makes of scientific and technical information concerning mineral
projects. Canadian standards, including NI 43-101, differ significantly from the requirements of the SEC,
and resource and reserve information contained herein may not be comparable to similar information
disclosed by U.S. companies. In particular, and without limiting the generality of the foregoing, the term
"resource” does not equate to the term "reserves”. Under U.S. standards, mineralization may not be
classified as a "reserve” unless the determination has been made that the mineralization could be
economically and legally produced or extracted at the time the reserve determination.